Tip Sheets

Understanding how health advocates, legislators are wrestling with Medicaid work requirements

By Alice Miranda Ollstein

Republican-controlled states are taking a fresh look at the subsidized expansion of Medicaid under the Affordable Care Act following a major shift in the federal government’s stance on 1115 demonstration waivers. The Department of Health and Human Services’ recent green light for work requirements, drug tests, premiums and other policies rejected by previous administrations is attracting the interest of not only states like Kentucky that already expanded Medicaid and are now looking to tighten restrictions on the program, but also states like Virginia that never expanded Medicaid in the first place.

The debate is most heated right now in Virginia, where the state House of Delegates recently passed a budget to fund Medicaid expansion with work requirements, but the Senate narrowly voted to block the effort. If just one GOP senator flips, the state could move forward on expanding Medicaid to cover more than 300,000 additional residents. But for Virginia and other states looking to implement the newly-allowed restrictions, many difficult questions lie ahead.  Here’s a guide to understanding some of the economic and ideological battles playing out in the states.

Fiscal questions

The GOP-controlled states hoping to implement work requirements say the policy will save the state money in the long run as hundreds of thousands of people are kicked off of Medicaid. In Kentucky, the first state approved by the Trump administration to use work requirements, premiums, and other new requirements to cull its Medicaid rolls, Gov. Matt Bevin (R) estimates that the new rules will save the state more than $300 million because nearly 100,000 fewer people will be covered by Medicaid.

But the states are finding that the policy will cost quite a bit of money as well. A new estimate out of Kentucky calculates that implementing the new rules will cost nearly $200 million  in the first six months alone—with additional costs to run and maintain the program. Tennessee, which is exploring adopting a similar Medicaid work requirement, estimates that it would cost the state $18.7 million per year and the federal government more than $15 million annually.

Legal questions

Health advocacy groups have long argued that Medicaid work requirements are illegal because they violate Congress’ original intent for Medicaid—“to provide health coverage for low-income people”—and do not meet the waiver law’s requirement that they consist of a novel policy experiment.

National Health Law Program is currently suing Kentucky on behalf of more than a dozen low-income residents likely to lose their Medicaid coverage because of the new rules, and legal challenges in other states are not far behind.

The Trump administration has argued that giving states waivers to test new Medicaid rules, like work requirements, will spur innovation and lead to positive health outcomes. And health law experts say the Centers for Medicare and Medicaid Services (CMS) has broad authority to approve or reject waiver applications. As Nicholas Bagley recently wrote in the Journal of the American Medical Association (JAMA), “All the agency has to do is explain how a waiver might yield insight into how to improve Medicaid and why such improvements, if they materialized, would ‘assist in promoting [Medicaid’s] objectives.’ When the explanation is reasonable, judges will usually defer.”

But how much insight do the demonstration waivers actually yield?

A new investigation by the Government Accountability Office found that the public is unlikely to find out whether that is in fact the case. Because the federal government has long been lax on requiring states to thoroughly study the impact of their Medicaid waivers and report their findings to HHS, the report found the waiver program is more of an opportunity for partisan policymaking than scientific experiment.

Learn more:

  • The vast majority of non-elderly, non-disabled people on Medicaid are already working, the Kaiser Family Foundation reported, and most of the unemployed are either full time caregivers for a family member, students, retirees, have a disability or chronic condition that isn’t federally recognized, or are looking but unable to find a job.

  • The implementation of work requirements in other federal safety net programs has not lead to more enrollees finding work. A federal study of the Temporary Assistance for Needy Families (TANF) cash assistance program found that after five years, people subject to a work requirement were not any more likely to be employed. Another study by the Urban Institute of work requirements for federal food stamps also found that the majority were already working, but many “face difficulty documenting their work hours for purposes of compliance.” The same study found that work requirements in federal housing assistance resulted in “no increase in average hours worked.”

  • The states seeking Medicaid work requirements are also some of the states hardest hit by the opioid crisis. Politico’s Rachanda Pradhan and Brianna Ehley talked to lawmakers, health care providers and advocates who fear the policy would lead to addicts losing access to the very health care they need to get well enough to work.

  • Medicaid work requirements only supposed to apply to “able bodied” enrollees, but what does that term actually mean? The New York Times’ Margot Sanger-Katz digs into the complicated history of a phrase whose connotations have long been more political and moral than physical.

Alice Miranda Ollstein has covered Congress, HHS, and state health policy for Talking Points Memo for the past year. She has been reporting in Washington, D.C. since 2010.